The Truth About Credit Card Debt

Do you struggle with credit card debt? I wrote an article this week for Social Moms called Five Reasons to Cut Up Your Credit Cards Today. I believe that one of the reasons many families get (and stay!) in debt is because of credit cards. Credit cards make it oh-so-easy to buy things that we cannot afford, and when we carry credit cards in our wallet we give ourselves a way to give in to our temptations. As a result, we find ourselves in credit card debt.

Are there people who use credit cards responsibly? Absolutely. By using credit cards responsibly I am referring to people who charge an amount on their credit card, then immediately pay the card in full. In other words, they do not carry a balance on their credit cards from one month to the next, and have no credit card debt. Responsible credit card users can benefit from the reward points gained from their cards.

Do the majority of people use credit cards responsibly? Absolutely not. According to Dave Ramsey’s Financial Peace University, American households spend over $412 billion in credit card charges each year. And the average credit card balance per family is over $9300.

It will take you 40 years to pay off your card. And that’s if you don’t make any additional charges!

The amount you will have paid in interest over the 40 years will total $22,564.

To sum it up, in 40 years you will have paid $32,564 for the luxury of charging $10,000.

The alternative:

Put $200.00 into an interest bearing savings account each month.

The interest rate is 6.5% compounded monthly

After only 4 years you will have saved up $10,975.23.

So the next time you pull out your credit card to make a purchase, ask yourself why you aren’t using your debit card instead. If it is because you don’t have the money in your checking account to cover the amount of the purchase, then challenge yourself by asking these questions:

Is this a want instead of a need?

Is this something I can live without?

Is this something I can save up for?

If you answer yes to any of the questions, put your credit card back in your wallet and walk away.